The IMF’s subtle messages
By Howard Schneider,
The International Monetary Fund is set up to lend money to countries in crisis, but it is also supposed to serve as a sort of moral authority on all things economic – a bully pulpit to tell blunt truths, discuss the risks the world is facing.
In practice, however, the agency has its own sort of code – economic diplo-speak that can smooth over almost any calamity and steer clear of offense.
The pinnacle of the art form is the managing director’s press conference held before the start of the fund’s semiannual meetings. Herewith, a sampling of IMF head Christine Lagarde’s press briefing held Thursday in Tokyo, with questions paraphrased and alternate endings offered.
QUESTION – Are you worried about tensions between China and Japan, and the fact that top Chinese officials have shunned the meetings in Tokyo?
MS. LAGARDE - Our concern is that they will be missing a great meeting, because really Tokyo is at its best. The colors are beautiful; the trees have the most beautiful colors you could think of…We hope that differences, however longstanding, can be resolved harmoniously.
WHAT SHE MIGHT HAVE SAID: A trade war or, worse, open conflict between the world’s second and third largest economic powers, would be devastating. I’d prefer the Chinese were here at the table.
QUESTION – Why is it taking so long for the IMF to provide loans to Egypt?
MS. LAGARDE - As you know, I visited Egypt at the end of August. We had very good discussions…We are due to return to Egypt in the course of this month to pursue discussions…Fingers crossed.
WHAT SHE MIGHT HAVE SAID: Things tend to slow down when the embassy of our most influential member gets trashed.
QUESTION – Where do things stand with Greece?
MS LAGARDE - What I can tell you is that the work continues.
WHAT SHE MIGHT HAVE SAID – Someone is going to have to come up with a bunch of money and it ain’t going to be us this time.
QUESTION – What’s your advice on the Chinese economy?
MS. LAGARDE - Well, I think the first advice I would give is be a partner in the global economy, full-fledged. Second, focus on the domestic market, which is clearly an engine for growth that China should activate and is planning to activate. When I say domestic market, I would divide between investment and consumption. Clearly, the focus going forward should be on consumption.
WHAT SHE MIGHT HAVE SAID – The Communist Party needs to let go of the financial system, stop coddling state owned companies, compete fairly, and push more wealth towards Chinese families. They know this needs to happen and the sooner the better.